THE ROLE OF INTERNAL AUDITING DEPARTMENT IN A HIGHER INSTITUTION OF LEARNING
(A CASE STUDY OF I.M.T)
This research work was undertaken to ascertain the roles, which an internal audit department can play in higher institutions of learning in the institute of management and technology I.M.T Enugu.In chapter one, you will the purpose of study, statement of problem, importance, scope and limitation of the study. The purpose of study was to find out the functions of internal audit department and how far these functions have contributed to the overall performance of this institution. Others include whether the internal audit department encounter any problem in the discharge of their duties and the consequence of not having internal audit department in an organization at all.In chapter two, it is the review of related literature, that is the review of the previous work of other authors, researches newspaper. In this chapter, you will find the definition, the importance, objectives and the functions of internal audit department in this institution.In chapter three is the research design and methodology. It analysis the sources of data location of data, method of investigation and collection. Chapter four is the data analysis and presentation. Also have you will see the answers of the ten distributed questionnaire that was answered by the staffs of I.M.T.While in chapter five the researcher stored the view that if an internal audit department is established in higher institution of learning, it will contribute immensely towards the overall performance of the institution. Through minimizing fraud and extravagant use of funds and inducing workers to give complete and accurate information.
TABLE OF CONTENTS
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF THE STUDY
1.3 THE PURPOSE OF THE STUDY
1.4 THE SCOPE AND LIMITATION OF
1.5 THE IMPORTANCE OF THE STUDY
1.6 DEFINITION OF TERMS
2.0 LITERATURE REVIEW
2.1 DEFINITION OF AUDITING
2.2 IMPORTANCE OF AUDITING
2.3 IMPORTANCE OF AUDIT DEPARTMENT
2.4 OBJECTIVES OF INTERNAL AUDIT DEPT
2.5 FUNCTIONS OF INTERNAL AUDIT DEPT.
2.6 THE NEED FOR AN AUDIT PLAN
2.7 PROBLEMS ENCOUNTERED BY THE EINTERNAL AUDITOR
3.0 RESEARCH DESIGN AND METHODOLOGY
3.1 SOURCES OF DATA
3.2 LOCATION OF DATA
3.3 METHODS OF INVESTIGATING DATA
4.0 DATA PRESENTATION AND ANALYSIS
4.1 DATA PRESENTATION
4.2 DATA ANALYSIS
4.3 TESTING OF HYPOTHESIS
4.4 DATA INTERPRETATION
5.0 SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 SUMMARY OF FINDINGS
1.1 BACKGROUND OF THE STUDY
The role of internal audit has grown tremendously in most organizations in the recent past. This can be attributed to the growths of the organizations that extends widely extended operations and the need to ensure that the organizations policies and basic accounting controls are observed at every part of the organization. Again it can be observed as a measure by management to ensure that the government regulations concerning the operations of organization, both public and private are duly complied with so as to safe guard confect and inconsistencies with the law.
As the organization expands, the supervisory responsibility boarders. The herd can no longer have personal knowledge of every aspect of the organization. It becomes impossible for him to monitor the continuing effectiveness of all controls. This calls for the delegation of this responsibility to a separate department in the organization; one of these departments is the internal audit department.
Internal audit is an independent appraisal activity within an organization for the review of the accounting financial and other operations as a basic for protective and constructive service to management. Internal audit department been defined as the department set up by the management of an organization usually managed by an accountant to review the financial activities of other employees thereby enhancing controls in the organizations. The department is concerned with all phases of the business activities or organization activities where init can be of service to the management. The key responsibility of the department (internal audit) as to test the system performance and controls throughout the organization and report their findings to the management together with recommendations as to how these controls and efficiency could be improved. This involves not only the accounting and financial records but also to obtain full understanding of the operation under reviews.
1.2 STATEMENT OF PROBLEM
The problem is that organization fund and properties are entrusted to certain individual employees in the organization and in most cases these individual workers are not brought under through surveillance. The result as that much of these funds and or properties is directed to personal uses. One of the ways of curtailing this ugly phenomenon is for the management of the organization to set up internal audit department which will be charged with the responsibility interalian, of monitoring the activities of these employees and effecting management control.
1.3 THE PURPOSE OF THE STUDY
The aim of this research work is as follows:
a. To determine the roles which an internal audit department can play in an institution of higher learning.
b. To ascertain how far these roles have contributed to the over all performance of the institutions.
c. To find out whether the internal audit department face any problem in the discharge of their duties.
d. To verify from practicing accounting the consequences of not having an internal audit department in an institution of higher learning and any organization in general.
Frankly, it is the supreme belief of the researches that the information collected from this study will highlight the benefits institutions without internal audit departments have been missing. Again, we are hopeful that it will serve as a foundation for the setting up of the department not only in these institutions of higher learning but also in other organizations whose business are not for profit making.
1.4 THE IMPORTANCE OF THE STUDY
The importance of this is that, it highlights and exposes the consequences of not having internal audit department in an institution. The department when established will no doubt contribute to the successful implementation of management policies as well as helping to safeguard the assets of the institution. An audit is an independent examination by a statutory appointed person called the auditor to investigate an institution. Its records and the financial statement prepared from them and thus from an opinion on the accuracy and correctness of the financial statements.
However, the importance of an audit in a higher institution of learning cannot be overemphasized, hence the following benefits:
A. AUTHENTICITY AND RELIABILITY OF ACCOUNTS: The accounts are regarded as authentic, correct and reliable as a true and fair indicator of the state of affairs of the institution. The rationale behind this is that the auditor did not partake in the preparation of accounts and hi opinion is an independent one, arrived at after an objective examination of all the relevant evidence relating to the financial statement.
B. UP DATING ACCOUTANCY WORK: Accountancy work is brought up to date thus highlighting causes of fluctuation earlier. Any weakness is also revealed more promptly, thus enabling corrective action to be taken before it becomes too late. It is widely held belief (and wrongly too) that the discovery of fraud is the main object of an audit and as such the auditor is often referred to as the “checker”. There is no denying the fact that errors and frauds may be detected during the normal course of audit, but it should noted that the main object of an audit is not to search for cases of fraud and misappropriation.
a. CLIENTS EFFICIENCY AND HONESTY: financial statement audit frequently have a favourable effect on clients efficiency and honesty. A knowledge that an independent audit as to be carried out results in fewer error in the accounting process and reduce the likelihood of misappropriation of assets by the clients. The fact that its financial statement assertion is to be verified increases the probability that management will be more truthful and forthright in its representations.
b. IMPLEMENTATIO9NS REASONABLE IDEAS: It is essential to highlight that based on his examination, an internal auditor can make suggestions to improve controls and achieve greater operating efficiency within the clients in the institution
In summary, the internal auditor is also concerned with
a. Ensuring that the institution transaction is conducted in an orderly and efficient manner.
b. Ensuring that the management policies and directions are strictly adhered to.
c. Ensuring that resources are economically, effectively and efficiently utilized in achieving the management polices.
d. Ensuring compliance with statutory requirement
e. Securing as far as possible the completeness and accuracy of the records
f. Safeguarding the institution’s assets.
Internal auditors of an institution are employees. They should be able to plan and carryout their work as expected and have access to the highest level of management. This is because they are also the pillar of the institution and have right to report any falsified document to the highest authority to take action immediately.
In these particular circumstances, operating internal audit department will definitely enhance the control machinery of and highlight the efficiency of workers in higher institution of learning.
1.5 DEFINITION OF TERMS
i. Defalcation of money: This means misappropriation of money.
ii. Separation of duties: This means division of labour.
iii. Clients: That is members of the audit department
iv. Audire and audit us: A Latin word that means audit and auditing meaning: hear and hearing”.
v. Irregularities: The word as used to refer to intentional distortions of financial statements for whatever purpose misappropriation of assets.
vi. Surveillance: This is an investigation or interview that has carried out for suspected clients.
vii. Jeopardize: This means the risk of destroying or harming.
viii. Multifarious: Variety of things
ix. Loopholes: space, way or opportunity for misfortunes.
x. Circumvention: To avoid difficulties.
xi. Collusion: Secret agreement in order to deceive people.
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